Local in Ann Arbor

The AATA gambles the farm in a push toward a transit system that will reach countywide and beyond.

As we have been documenting for a couple of years (see the Transportation Page), there are multiple efforts ongoing to bootstrap Ann Arbor and Washtenaw County into a strong, complex,  interconnected transit system.  Many (but not all) of these efforts are incorporated in the Ann Arbor Transportation Authority’s push to become a regional transportation authority (see their website, Moving You Forward).  Actually, the AATA has served as something of a regional transit system for years.  Though it is chartered and substantially funded by the City of Ann Arbor (reviewed in our post, AATA Yesterday and Tomorrow), AATA has run buses into neighboring communities under POSAs (Purchase of Service Agreements) in which the extra-city area governments have paid for the service.  But now, as AATA Board Chair Rich Robben has said (quoted by the Ann Arbor Chronicle), the AATA will venture into deficit spending as a “catapult” to achievement of its Transit Master Plan.

The AATA is, in fact, reaching even further than the TMP.  An article in AnnArbor.com enumerates the many different moving parts incorporated into this year’s budget (the reporter, Ryan Stanton, evidently pulled these from the Work Plan; I have not verified the accounting).  One eye-opener in the budget (see the full document here) is $1,116,900 to purchase service for a shuttle to the Detroit Metro Airport.  In addition, there is $10,000 budgeted to market this service, which has been a major preoccupation of board member David Nacht in recent months.

But much of the overextended budget is related to two things:  the expenditures made to establish a county-wide transit organization under Act 196; and significantly, implementation of portions of the Transit Master Plan in advance of obtaining countywide funding or other funding external to Ann Arbor.

The board authorized release of the TMP in June.  (See the summary by the Ann Arbor Chronicle and our brief discussion.)  Much of the formulation of the TMP and its further moves towards operation have been under the aegis of a consulting firm that is based in London (England).  See the discussion recorded by the Chronicle about the vote to extend the contract for that firm, Steer Davies Gleave.

The path from here to there is complicated, but has been carefully laid out.

From a June 2011 AATA board retreat

In August, the AATA board released the third volume of the TMP, the funding report.  (See links to this voluminous report on the Chronicle’s account of the meeting.)   They also released the names of the financial committee who are tasked to review options for funding the ambitious TMP.  It is a roster of the powerful and influential.

The committee, which met for the first time on September 16, set an ambitious schedule.  From the Chronicle account:

“Berriz told members of the group at the Sept. 16 meeting that they will meet three more times, and will produce a white paper by the end of the year.”

This seemed headed toward an obvious result.  Though the funding report suggested many possible options, quite a few of them are not possible under current Michigan law, which severely restricts the ability of local governments (including authorities) to levy taxes.  Very nearly the only type of tax available to localities is the property tax.   (As we explained in an earlier post, AATA is currently supported in part by a millage paid by Ann Arbor taxpayers.)

From a June 2011 AATA board retreat

Given the alternatives, I thought that the finance committee’s chief function would be to bless and promote a county-wide millage campaign for the fall of 2012.  This was further supported by a remarkable exchange that occurred at a September Planning and Development Committee meeting where the anticipated deficit budget was discussed.  The following is a paraphrase, not an exact quotation. It followed the explanation by Phil Webb, AATA controller, about the deficit budget, which would entail dipping into reserves.

Rich Robben: We won’t be able to follow this mechanism (dipping into reserves) next year.  We’d better pull some rabbits out of a hat.

Michael Ford: I’m looking at finding some rabbits.

Phil Webb: There will be a gap between September 2012 and July 2013.

Explanation for that last comment: if a vote over the entire county is held in 2012 (most likely in November) that affirms a new millage, that will not be levied until the 2013 tax year.  This means that until taxes are collected in July 2013, no revenue would be available.  (We explained some of this at length in a post about a city income tax.)  But the AATA, which uses the Federal tax year (October-October), would have to pass a new budget in September 2012 in advance of the millage vote.  So not only will the AATA have to pass a new year’s budget without a certainty that a countywide millage will pass, but three-quarters of a year will pass before revenue will be realized from a successful millage vote.

But wait! It gets more exciting.  The story will continue.

This entry was posted on October 29, 2011 at 9:30 pm and is filed under civic finance, Transportation. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site.